Have you ever wondered how you can cut your monthly expenses? In today’s environment of high inflation and even higher expenses, managing your monthly expenses is a critical life skill, especially in your 20s. Every additional dollar saved and invested in your 20s is extremely valuable, due to the power of compound interest. One dollar saved when you’re 25 can be worth over $20 when you are 65 (assuming an 8% yearly return). Whether you’re investing for the future, saving for a house, trying to pay off student loans, or simply aiming to build financial stability and wealth, finding creative ways to cut down on expenses can significantly impact your day-to-day life and your financial future.

Saving and investing your money is crucial to building a solid financial future. However, it’s equally as important not to go overboard and live off of beans and rice. Let’s take a look through a few creative approaches you can take now to start cutting down on your monthly expenses, while also maintaining your lifestyle standards. 

Optimize Your Monthly Bills and Subscriptions

In recent years, many products and services have been moving towards the subscription business model. Instead of paying a one-time fee for something, we end up paying every month and paying significantly more in the long run. Even worse, we can sometimes forget that we’ve subscribed to something or forget to cancel that pesky free trial, so we end up paying for months for something that we never use.

Have Only One Subscription of Each Type

Consider looking through your credit card bills and evaluating the subscriptions you see. If you see something you haven’t used in a while, just cancel it! There’s almost always no harm in canceling a service since you can just re-subscribe later.

Some core services are necessary like one music service, one TV show service, and maybe a storage service. However, you don’t need multiple of the same type of service, i.e. you should never have HBO, Netflix, and Hulu all at the same time. You can subscribe to one service at a time, watch all the shows you want, and then cancel and move on to the next service. Watch all the Netflix shows you want, cancel Netflix, and then subscribe to Hulu and watch all the shows you want there.

Look for Lower Phone and Internet Bills

Additionally, look for opportunities to cut down on and optimize your technology expenses like phone and internet bills. One easy thing to try is just simply calling up your cellphone or internet provider and asking if there are any loyalty discounts they can offer you. This likely won’t work in a lot of cases, but if you’ve been with the same provider for a long time it might save you $10 or $15 bucks a month here and there, which can add up!

The main method to lower your bills on cell phone and internet plans is to look for better deals from other competing companies and switch. You can also combine this with the timing of your cellphone upgrade since many mobile providers will give you huge discounts on new phones if you are adding a new line. For instance, you may get $500 or more off of a new phone when trading in your old one and switching to a new carrier. Then when you factor in the monthly savings on your phone bill, this can provide significant savings.

Switching cell phone or internet providers is kind of a hassle, but if you do it every few years it can save you a ton of money in the long run, since saving $20-30 bucks a month on each bill can save you hundreds of dollars over a few years. 

Cashback Rewards: Maximize Your Buying Power with Portals and Rewards Sites

There is only so much you can do to reduce your required spending, and you still need to live and have a nice life, so some spending is unavoidable. However, there are some strategies to get a bit of money back on your everyday spending! The main thing that you can implement today is using cashback portals or rewards sites. Services like Topcashback and Rakuten, allow you to earn cashback on your purchases. Essentially, whenever you shop online you click through the link on their portal and shop as you normally would. Then they will give you some cashback in return. 

An alternative to cashback portals is gift card marketplaces. These allow you to buy gift cards for stores and websites you are shopping at but either give you a discount or cashback for future purchases. One marketplace we like to use is Raise which allows you to get upwards of 5-10% cashback on certain gift cards. Using our link, you can get $5 off your first purchase of $25 or more. If you combine this cashback with your credit card cashback of 2-3%, you can save a lot on your purchases. The only downside to consider is that you won’t get purchase protection and returns are more annoying, since gift cards are hard to refund.

Next time you check out online, see if your favorite retailer is listed on Topcashback or Raise. This simple step can accumulate significant savings over time, putting money back into your pocket

Smart Housing Savings: Live with Roommates or at Home

The most significant monthly expense for a vast majority of people is housing. Given that we’re Gen Z and relatively young, most of us are renting or would need to rent in the future. A great way to effectively eliminate your monthly housing expenses is to live at home with your parents if possible. If you need to move to a different city or your relationship with your parents isn’t great, then there’s no way to achieve that. But, if it’s feasible to live at home, you can save a significant amount on rent every month and contribute to the household expenses in other ways.

Some people consider living at home to be a social killer or taboo, but it’s becoming more common and acceptable. Being able to save $2000 a month on rent every month can put you well on your way to maxing out your 401k or saving up for a house. It’s hard to pass up an opportunity to set yourself up for life since compound interest has such a profound impact if you start investing in your 20s.

The other main option is to live with roommates. While this may not seem like an ideal living situation, especially if you like to have your own space, you can still have your own bedroom but pay significantly less than if you’re living in a 1 bedroom or studio. This can save you many hundreds or even thousands of dollars a month. Consider, in NYC a decent studio might cost you $3300 a month, whereas a 2 bedroom 1 bathroom might cost $5000, but split between two people, you would only pay $2500 a month. This is just an illustrative example, but in most cases, it works out to be cheaper if you split a larger apartment between people.

So, consider your various living arrangement options and try to strike a balance between cost savings, as well as freedom, quality of life, location, and other factors.

Meal Prep Magic: Plan, Cook, and Save

One of the other major recurring costs is food. We need to eat to survive, but there are many options, some more budget-friendly than others. Meal prepping and cooking at home is a game-changer for both your budget and your health. Eating out once or twice a week can be a great change of pace and can bring a lot of enjoyment to your life. However, it’s easy to lose track of the toll on your physical and financial health that eating out too often can cause.

Invest time over the weekend in planning out your meals for the week and pre-cooking some of your food in batches.  Portion your meals into reusable containers for easy access throughout the week. By preparing your meals in advance, you can also save by buying in bulk, as we discuss in the next point, but it also enables you to make healthier choices. As an alternative to buying takeout, this also helps to alleviate some of the stress and mental energy that comes with preparing and cooking food during the work week. Experiment with diverse recipes to keep your meals exciting, and watch how this simple strategy can transform your budget and health.

Buy In Bulk: Stock Up On Necessities

Shopping in bulk is a timeless strategy for cutting costs. Admittedly, it’s hard to buy food in bulk if you’re living alone, but it still can be useful or non-perishable items. Try to take advantage of the bulk discounts and reduce the frequency of your shopping trips. Buy non-perishable items that you will always need, such as toiletries, cleaning supplies, vitamins, and batteries in bulk. Especially if these items are further discounted, you can stock up.

Make a list of commonly used items and explore options for buying in bulk that can make your budget go further. This might have a larger upfront cost than simply buying what you need, but in the long run, you can save a lot. The per-unit price is significantly lower, resulting in substantial savings over time. 

Start Saving Now!

Implementing these creative approaches and strategies to cut your monthly expenses can help you cultivate financial discipline, but will also foster a mindful and intentional approach to spending and saving. As you embark on this journey to financial freedom in your 20s, remember that small changes today can pave the way for a more prosperous tomorrow. Try out some of these approaches and find a balance between savings and your quality of life. It’s essential to not go overboard on saving or spending and to find a balance that works for you. Stay tuned for more insights on financial independence and savvy budgeting for Gen Z at Zooming to FIRE!

Disclaimer: The content provided on this blog (Zooming to Fire) is for informational and educational purposes only. It represents the opinions and perspectives of the authors and should not be considered as financial advice. The authors are not licensed financial advisors, and no content on this blog should be in any way interpreted as professional financial counsel or advice. See more here.